Capitalism Created the Middle Class and They Still Have it Pretty Good
"In the run-up to the release of his new budget, President Obama painted a dire picture of the middle class. It has, he said, 'been under assault for a long time ... '
It's certainly true that the past two years have been tough for many middle-class Americans. Many of them have lost jobs and homes, seen their investments decline and, more broadly, faced new uncertainties about incomes.
Families are suffering in every community – but the entire middle class under assault? Don't believe it. No hard evidence points to a general decline in living standards for the average American family. Perhaps, having it so good for so long has created expectations, some of them a bit unreasonable. Consider:
•America's middle class lives in bigger and better-equipped homes than ever before, with appliances of all kinds, air conditioning, big-screen televisions, computers, DVD players, digital cameras and so much more (see chart above, "The Spread of Products into U.S. Households").
•Nine in 10 households own a car – better equipped, more durable and more fuel efficient than any in history.
•Cell phones once cost $4,200, but they're now less than $100. Nearly every pocket and purse holds a cell phone, many now with Internet access.
•In real terms, the average family's net worth has tripled since 1970, even after the past two years of declines in housing prices and stocks.
•Tap water's free, but Americans still buy 8.6 billion gallons of bottled water a year.
•Obesity has replaced hunger as the most pressing dietary concern.
Innovation and trade continually drive down the real cost of goods and services and increase the productivity of each hour of work. As this capitalist engine churns onward, the scarcity that plagued mankind for millennia has given way to the abundance that's the foundation of today's vast middle class.
The capitalist system literally created the middle class, and the best way to maintain and improve our living standards lies in keeping it functioning at peak efficiency. Government largesse, no matter how high-minded or well-intended, isn't going to do much for the majority of middle-class families. They have to pay their own way – as always."
~From Dallas Fed Economist W. Michael Cox's article, "The Middle Class Still Has It Pretty Good."
MP: In the graph above, notice how it took almost an entire century for the telephone to become commonplace and reach 90% of all households, compared to the cell phone, which took about a decade to reach 90% ownership.